Blue Flight

With the midterm elections rapidly approaching, professional forecasters are focusing much of their attention on traditionally red states in middle America, such as Iowa, Arkansas, Louisiana, and West Virginia. Many of these races are tighter than they should be, given the unpopularity of the president and his policies. At the same time, polling companies are admitting that they are expecting greater polling error this year. Part of this, they attribute to the difficulties in predicting turnout, but one cannot help but wonder to what extent rapidly shifting demographics are playing a role in this election’s high degree of uncertainty.

There’s also an inherent problem with simply asking people what they prefer. What people say they want and what they actually want are two different things. Economists recognize that we cannot know people’s true preferences ex ante, but that we can get a clue to these preferences by observing past behavior. In this way, consumers are said to reveal their preferences. When a consumer purchases an apple for a dollar, he reveals that, at that particular place and time, he values the apple more than the dollar. Of course, this can always change. The reality of diminishing marginal returns will mean that the next apple he buys will be worth less to him than the first, if they are purchased in quick succession. But we as economists can generalize and assume that most of the time, the apple will be preferred to the dollar.

This sort of analysis has been applied to consumer behavior for many years, but less attention has been given to political behavior. Here, instead of consuming goods and services, voters are consuming government policies. Traditionally, voting behavior is analyzed in an effort to determine revealed preferences for governance. This method errs, however, in assuming that the votes cast reflect actual preferences. The ballot box is more akin to a written survey than to a market, in that voters are asked would they would most prefer, and answer, but do not necessarily get what they ask for. We therefore cannot determine with any amount of certainty that the voter actually prefers the policies of his chosen candidate or referendum to others, unless he is actually faced with living under their effects.

Far more revealing, then, is an analysis of how people actually behave when confronted with different bundles of government policies. Rather than expressing an empty verbal preference for a particular law, the actions of a voter forced to live under that same law can more effectively reveal his true preferences. But which actions ought we to observe? What behavior most reliably reveals a person’s preference or distaste for a particular policy? As is so often the case in economics, there is no precise metric. However, there is one sort of behavior from which a great deal can be gleaned about voter preference: the simple refusal to live under a certain set of laws. In other words: migration.

An analysis from the New York Times took the time to track domestic migration trends within the United States, with some extremely interesting results.

In what the paper describes as the Blue-State Diaspora, there is a growing number of migrants from traditionally blue states to traditionally red states. People born in New York are moving to New Hampshire, Virginia, North Carolina, and Florida, whereas people born in California are moving to Texas, Arizona, and Washington. Since 2000, the percent of blue-state natives living in red states has increased by almost a quarter.

It’s surely no coincidence that the states experiencing the greatest exodus are also the ones with the highest taxes and most regulation. An analysis from the Tax Foundation recently compared the real purchasing power of a dollar in all fifty states. In California, a dollar is worth only $0.88 compared with the national average. In New York, it’s even lower at $0.86. Only Hawaii and Washington, DC do worse.

It does not seem unreasonable to connect the high cost of living in these places to high cost of doing business created by excessive taxation and regulation. In fact, the map of state and local sales tax rates across the U.S., also compiled by the Tax Foundation, overlays eerily well with that one depicting the cost of living. Nor does it seem a stretch to imagine people migrating in order to minimize their own bills.

Thus it would appear that many people don’t actually enjoy the high tax rates that their representatives enact, and would prefer to live somewhere a little more lenient. An interesting followup question, then, is what are the implications of this conclusion for future elections?

The effects of these migratory patterns on the political landscape will likely be two-fold. First, the populations of traditionally blue states will decline relative to the rest of the country, resulting in a smaller share of the electoral college for those states. Advantage: Republicans. On the other hand, if the migrants’ voting behavior remains the same, migration could cause some traditionally red states to flip blue, or at least purple. Indeed, Texans are already beginning to worry about the increasing numbers of Democratic voters in their state due to migration both from within the country, and from Mexico and Central America. Advantage: Democrats.

Still, the most remarkable conclusion from this analysis is that the policies blue state residents say they want – the ones they vote for – are not the same as those under which they wish to actually live. In contrast, red state residents would appear to be more willing to tolerate the policies for which they have voted.

Of course, as with any analysis of this type, a couple of caveats are in order. The blue states experiencing exodus, in addition to having political policies more focused on heavy regulation and high taxation, are also different from red states in a number of other important ways that may well contribute to the migration patterns observed. For example, California and New York are known for having residents with higher than average incomes. These wealthy individuals may therefore have a greater luxury of mobility than their poorer neighbors who would like to move, but who lack the means to do so.

Still, the demographic trends provide an interesting illustration of the difference between reported preferences and observed preferences, and perhaps give us a glimpse into the political landscape of America’s future.